CPA files to free family trust from freeze on McGinn Smith assets

An East Greenbush CPA has stepped in to protect the trust David Smith and his wife Lynn set up for their children.

David Wojeski, who heads Wojeski & Cos. CPAs P.C., was granted permission to intervene in the U.S. Securities and Exchange Commission’s case against McGinn Smith & Co.

The SEC has charged the Albany brokerage firm, and partners Smith and Timothy McGinn, with running a Ponzi scheme.

The men allegedly raised more than $130 million from investors and used the money to support their fledgling business enterprises.

Lynn Smith, David’s wife of 42 years, is named as a relief defendant in the case because she allegedly received some of the “ill-gotten gains” of her husband’s alleged scheme.

She contends, however, that any funds she received were repayment for loans she had made to one of the many entities controlled by McGinn Smith.

On April 20, the SEC was granted a temporary restraining order in U.S. District Court in Albany, freezing the assets of McGinn Smith and its principals. Among those assets was the David L. and Lynn A. Smith Irrevocable Trust, an estate planning vehicle of which Wojeski is the trustee.

The trust was not the subject of any of the allegations against McGinn Smith.

In an affidavit filed with the court in late May, Lynn Smith said she had established the trust in August 2004 to benefit her children during her lifetime.

She funded it with $6.5 million earned from stock originally purchased in 1992, when the former Albany Savings Bank converted from mutual to stock ownership.

The newly formed Albank later was purchased by Charter One Financial, which was, in turn, acquired by Citizens Bank.

There have been no other transfers into the trust.

Lynn Smith, who is 63, told the court that neither she nor her 65-year-old husband have any financial interest in the trust, which “exists solely, exclusively and permanently for the benefit of our children.” The couple lives in Saratoga Springs.

Wojeski asked to intervene in the case for the limited purpose of requesting that the court lift the restraining order as it pertained to the Smiths’ trust.

He said it was his fiduciary duty to manage and preserve the assets of the trust, and that freezing them, without notice, prevented him from making stock trades or other moves.

He noted that given the ongoing volatility of the stock market, the continuation of a restraining order would “irreparably imperil” the trust’s assets.

The SEC did not file papers in opposition to Wojeski’s request and The Hon. David Homer, the federal judge assigned to the McGinn Smith case, granted the CPA’s motion.

A hearing on the temporary restraining order has been scheduled for June 9.